Factors Affecting International Business -Domestic, Foreign and Global Environment
Clarke Ricks School of Business,
Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
June 8, 2022
Factors Affecting International Business -Domestic, Foreign and Global Environment
This assignment speaks about factors affecting international business through Domestic,
Foreign, and Global Environment. Every Company needs a business plan and infusion of capital
to develop methods related to Joint Venture, Mergers, and Acquisitions.
International Businesses largely depends on economic activities of the world. To increase
the trade, the policymakers, managers and entrepreneurs have focused their efforts and look
for new opportunities in the global markets. The economies of all countries depend on each
other today. The rise of globalization has made the world dependent on each other. So, it can
be implied that every country’s economic policy will impact another country’s growth.
For example, the Recession in one country like the USA will affect various countries like
India, the UK, Australia, and many other countries. If they get disrupted, then economies
around the world would get affected.
Developments of International Business
From 2010-2020, the world has seen some economic changes and developments. Some of
these changes are as follows:
1. The trade agreement between United States-Canada-Mexico free trade region through
the North American Free Trade Agreement (NAFTA).
2. Developments within the European Union.
3. Continental economic efforts to help rebuild Russia and the other countries of the
former Soviet Union.
4. The continued economic power of Japan in the Pacific Rim and renewed progress of
China.
What factors affect International Business?
In the 1990s the WTO was established. This organization affects international business[1].
The liberalization policies and technology transfer are prime factors affecting international
Business.
Positive factors affecting international Business:
1. Electronic Fund Transfer
The inception of electronic fund transfer has impacted the growth of international
business. It means an improvement in the banking system, which has accepted the digital
movement of funds.
2. Technological Innovation
The global business planning became more successful, with the integration of technology.
The advancement of technology is seen with the effect of globalization. It improved global
communication and transportation. They are great influencers or factors affecting international
Business. The businesses are integrating due to technology advancement.
3. Dissolution of Communist Markets
The effect of the dissolution of the communist markets has led to the emergence of the
global markets. With the dissolution of communism, countries start expanding their businesses.
Due to this privatization occurs which would create a positive effect on the country.
4. Legislations Evolving
The legislative changes of the country are the factors affecting international business. The
law of the country plays a pivotal role in the development of business. The progressive
legislations like ease of formation of foreign company, less corporate tax and relaxed security
legislations would affect companies established in the country.
5. Customer demands
The growth of Business in this digital age is dependent on the needs of the customer.
International brands established by the big business houses in different countries are running
globally. Such are- BPO-Business Processing Units where customer support is given for their
product by the customer support agent sitting in one country to the customer purchasing from
another country. There are businesses Like Amazon, or all e-commerce websites running solely
due to customer demands. These big business houses have to incorporate themselves in
another country, due to the heavy demand. The customer demands one of the factors affecting
international Business.
It can be seen as:
a. Quality is the customer’s preference.
b. The sales process is more and more under customer control.
c. The rise of middle-class customer.
d. The rise of female power.
e. Advancement of new technology.
6. Taxation Laws
The taxation regime of any country is the factor influencing international Business. The
treaties like double avoidance agreement attracts investors. The global integration of
economies has influenced them to bring changes in their taxation policies.
Difficulties in doing international Business
1. Economic environment
The economic environment offered by one country is different from another country.
There are countries which are developed, and some may be emerging. In each of these nations,
there will be a vast difference visible in their growth and investors doing businesses
internationally. This is one of the factors affecting international Business. There may be a
difference from education to infrastructure. It may act as a hindrance to the development of
international business.
2. Cultural Environment
The cultural environment of one country is different from another country.
3. Political Environment
The political environment of every country is different. There may be problems which the
international business has to deal with.
Conclusion
It can be summarized that factors affecting the international Business are both a positive
side and a negative side. It is essential to understand that to develop trade and Business the
Governments today are imposing less restriction thus allowing products and services across the
borders. This has enabled governments provide easy access to various goods and services.
Countries are developing infrastructure as per international norms to offer favorable
conditions for foreign investment that is the key to development in this modern world. This
includes laws, policies, banking, transportation etc. Consumer behavior is changing due to
innovative products and services that enable them to meet their requirements. This gives
pressure to organizations to introduce new innovative products and carry out research and
development activities to satisfy their customers and gain market share.
Global operations of organizations lead to the development of good quality products as
they can fully utilize global resources to develop such products and compete with domestic
companies.
